Nestle India hits roadblock in re-calling Maggi. More than 40% stock out of its reach

Nestle India, which is recalling Maggi from the market citing customers’ faith has been shaken, now has another issue to struggle with.

The company would not be able to access and recall as much as 35-40% of the total stock across the country as millions of outlets selling Maggi are outside the company's direct network.

Nestle directly reaches around two million outlets where it sells products through its own distributors or wholesalers. But, according to a data by market researcher Nielsen, the company’s products reach 47% of India's estimated 8.8 million retail outlets.

This means, over two million stores that sell Maggi are serviced through middlemen, semi-wholesalers or even larger kirana owners.

"At any given time, about 40% of the products are difficult to trace in the complex trade system," Mayank Shah, deputy marketing manager at Parle Products, told Economic Times.

"We can always go to wholesalers where we supplied products directly, but there are villages with less than 2,000 people where products are distributed by semi-wholesalers in small batches. To get those packs back is neither possible nor economical," Shah further said.

The financial daily reported that even if Nestle was able to recall 100% of the Maggi stock from its distribution network, it would still not be able to reach at least half the total outlets resulting in about one-third of the product by volume being left on shelves.

"Recall is difficult to implement and it won't be efficient in rural areas," Abneesh Roy, associate director at Edelweiss Securities, told ET.

RS Sodhi, managing director at Gujarat Co-operative Milk Marketing Federation that makes Amul dairy products, told the financial daily that a complete pullout of Maggi from the Indian market will be complex considering the deep penetration of the product into every nook and corner of the country.

"It will take 5-7 days for distributors to withdraw the stocks from retailers. But in smaller towns and villages, unless the distributors reach out to the smallest retailer, the stocks will remain, which is what may become a big challenge," said Sodhi.

A senior executive with a retail chain that had stopped selling Maggi on its own told ET that its contract with Nestle ensures the company will take back all unsold stock.

Despite the recall, some online grocery sellers were selling Maggi till late Saturday. While most popular online players had stopped selling the product, orders could be placed for as many as 40 packs on sites such as OneKirana and WeAreOpen.

OneKirana founder Megha Singh said a few orders were accepted by mistake.

(Image: Indiatimes)